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‘Airline Business Not For Governments’

Turkish Airlines President and CEO, Temel Kotil

A top executive at a leading international airline said that governments across the world, either directly or indirectly, should not get involved in hospitality related business ventures. This is because governments wherever in the world were prone to corruption and customer satisfaction rarely finds a place in the business agenda.
Speaking to a group of visiting journalists from Sri Lanka, President and Chief Executive Officer of Turkish Airlines, Temel Kotil said that the experience globally had been, wherever governments got involved in running hospitality related businesses such as airlines, they invariably ended up in failure.
“Wherever governments attempted to run airlines, they have ended up in failure as this line of business is something they are not configured to do. Customer satisfaction is rarely on the agenda in state operated ventures and in today’s competitive world, if you do not give customer satisfaction top priority, the business is doomed,” said Kotil.
The Turkish Airlines President and CEO should know what he is talking about having served as vice president when the 80-year old Turkish Airlines was state-owned and now as its big boss under private ownership.
According to Kotil the big change came in May 2006, when the Turkish government sold a 51% stake in the carrier. He refers to the benefits of a hands-off approach from the Turkish government. Kotil feels that “government mentality in general is poison to companies, it is killing them”, by causing them to “go for the cheapest solutions”. Yet since Turkey’s government relinquished its controlling stake, he says: “If we lose money, we are dead. From that point on the relationship with the government is: ‘they do their job, we do ours’.”
Ironically enough Sri Lanka has seen the reverse where its national carrier, SriLankan Airlines which was privatized in the 1990s and was running at a profit was once again brought under state control by the present government by buying back a controlling stake. The results have proven Kotil right. Last year SriLankan posted a loss of nearly Rs. 20 billion and according to Public Sector watchdog COPE, the trend is likely to continue for at least another three years.
Meanwhile world air traffic measured in revenue passenger kilometers (RPKs) is expected to grow by 5.2 percent annually over the next 20 years, while international air traffic on key routes is expected to grow by 7.5 percent by 2014.
According to IATA, the top five countries in terms of traffic growth are Poland, China, Czech Republic, Qatar and Turkey, with growth rates ranging between 8.9 percent and 11.2 percent. Freight on the other hand, is expected to grow at 6.3 percent globally during the same period.

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